Epistar sees end to overcapacity issue

MARKET EQUILIBRIUM:：The nation’s largest LED chipmaker said potentially robust demand for LED lighting could help resolve the problem by the end of next year

By Helen Ku / Staff reporter

Thu, Oct 17, 2013 - Page 13

Supply and demand for LED chips could reach an equilibrium in the global market in 2015 as penetration of LED lighting products continues expanding throughout next year, Lee Biing-jye (李秉傑), chairman of the nation’s largest LED chipmaker Epistar Corp (晶電), said yesterday.

“The global LED market is still facing an overcapacity, but the problem may be resolved by the end of next year at the earliest if market demand for LED lighting products remains robust,” Lee told reporters on the sidelines of a forum in Taipei.

Driven by rising demand for LED bulbs and tubes, the global LED lighting market is forecast to surge 47.8 percent to US$35.3 billion next year from US$23.8 billion this year, market researcher TrendForce Corp (集邦科技) said in a report.

Overall, the global penetration rate of LED lighting products is forecast to grow to 32.7 percent next year, while those of LED bulbs and tubes are estimated to increase to 20 percent and 15 percent respectively, TrendForce said.

To meet increasing market demand for LED lighting products and enhance production yields, LED chip manufacturers will need to acquire up to 250 units of metal organic chemical vapor deposition (MOCVD) equipment over next year, the report said.

As most Taiwanese and Chinese LED chipmakers’ facilities are running nearly at full capacity this year, those looking for additional MOCVD equipment may seek to acquire them from their smaller rivals, which are expected to drop out of the increasingly competitive market because of the high costs of running these machines.

Echoing TrendForce’s view, Lee said a majority of Taiwanese and Chinese chipmakers have been suffering from overcapacity since last year.

However, given that LED lighting product shipments are likely to double next year from this year, orders for MOCVD equipment are expected to grow from 70 to 80 units this year, to 150 next year and 300 in 2015, he added.

Currently, Chinese chipmakers own the greatest share of MOCVD equipment in the global market with 34 percent, followed by Taiwanese and Japanese chipmakers — both at 21 percent — South Korean chipmakers with 15 percent, and finally 9 percent for European and US chipmakers together.

As for expanding applications of LED lighting products, TrendForce said the demand for LED bulbs and tubes is likely to remain strong next year especially for engineering, commercial and outdoor usages.

Since the penetration rate for LED backlight products has climbed to 95 percent so far this year, the global market value of LED backlight products could shrink for the first time this year, the report said.

Asked whether demand for LED backlit TVs rose during China’s national holiday earlier this month, Lee said Epistar did not see signs of solid demand from Chinese customers.

However, the Chinese government’s new subsidy program later this quarter might boost demand and orders later this year, Lee said.

He said Epistar’s sales this quarter are likely to drop by between 15 and 20 percent quarter-on-quarter because of seasonally low demand.